Grocery retailers are facing cost pressures from nearly every direction, and according to Dan Kim, chief financial officer of accounts payable automation platform Ottimate, too many of them are absorbing those costs without the visibility to see where the money is going.
Kim, who has served as Ottimate’s CFO since 2023 after a career spanning investment banking and CFO roles across industries as varied as manufacturing, restaurants and healthcare, said the back office has become an overlooked source of both risk and opportunity for grocers. Ottimate’s platform uses artificial intelligence to automate the invoice-to-payment lifecycle — a process that, across much of the grocery sector, remains heavily manual. The aim, Kim said, is to transform the back office “from a cost center into a profit center.”
Mounting cost pressures
Beyond standard inflation, Kim said grocers are contending with rising labor and energy costs along with agricultural and supply chain disruptions. Those pressures are especially acute in an industry where margins often fall below 2 percent — a level at which even modest inefficiencies or losses can have an outsized effect on profitability.
A fraud gap hiding in plain sight
The fraud picture in grocery looks different than in other industries, Kim said, largely because of the sector’s complex supply chain. Hundreds of vendors, high transaction volumes and perishable goods that demand rapid processing combine to create vulnerabilities that manual review struggles to catch.
The numbers underscore the exposure. Ottimate’s 2026 State of AP Report found that 62.5 percent of grocery stores experienced fraud or overpayment in the previous 12 months, yet only 25 percent had fraud protection built into their accounts payable processes. None of the grocers surveyed were fully automated.
“Fraud prevention should be the top priority for grocery retailers,” Kim said, pointing to a combination of high fraud incidence, limited detection and a lack of real-time reporting that can quietly drain margin.
Common schemes include vendor impersonation, in which fraudsters mimic supplier communications to redirect payments; invoice manipulation, in which prices or quantities are inflated on high-volume recurring orders unlikely to draw scrutiny; and duplicate submissions, in which the same invoice is sent to multiple locations in hopes that decentralized teams will not catch the overlap. Internal risk is just as real, Kim said. Without segregation of duties, a single employee controlling both vendor setup and payment approval can create fictitious suppliers and authorize payments undetected.
AI raises the stakes
The same technology driving automation is also making fraud more sophisticated. Bad actors can now scrape LinkedIn and other public information to craft convincing fake invoices and emails, Kim said, and use generative AI to fabricate realistic receipts. He pointed to phishing schemes in which a fraudster spots an executive attending a trade show on social media, then sends an invoice from a fake vendor for one-off services supposedly tied to that event.
That environment makes strong approval workflows and validation more important than ever, he said — particularly in grocery, where thousands of invoices flow in weekly from hundreds of vendors across multiple locations.
Building the ROI case
Grocery stores process an average of 10,000 to 15,000 invoices per month and take more than 11 days to close, according to Ottimate’s data — a higher volume than retail segments such as hospitality, which averages 5,000 to 9,999 invoices monthly. Stores that close quickly tend to have stronger automation or process discipline, Kim said, while those taking longer are likely still operating manually, compounding both inefficiency and fraud risk.
The return on automation, he argued, extends well beyond faster processing. One frequently overlooked benefit is the recovery of early payment discounts.
“We work regularly to uncover five to six figures in lost savings from missed early-pay discounts alone, simply because invoices weren’t processed and approved fast enough to take advantage of the terms vendors were already offering,” Kim said. When an invoice lifecycle drops from three days to under one day, he added, that window reopens.
Other gains stack up across the process. Ottimate saves companies the equivalent of 0.88 full-time employees per year on average, Kim said, and customers using its purchase order matching capability save an average of 152 hours and more than $40,000 in labor annually. Taken together with duplicate detection, credit recovery and cost-discrepancy identification, he said, automation becomes “a genuine margin protection strategy.”
Metrics worth watching daily
Roughly 50 percent of grocers report operating without real-time reporting, according to Ottimate’s data, leaving them unable to react to price spikes or volume errors until weeks after the money has left the business.
Kim recommended grocers monitor a handful of metrics every day: invoice accuracy, dollars lost to pricing or invoice errors, outstanding credits not yet received, discounts captured versus missed, and the percentage of overdue invoices.
Doing more with lean teams
Staffing is another pressure point. Ottimate’s report found that 37 percent of grocers operate with only two or three accounts payable staff — a size at which manual processing can become a liability. Automation allows the same small team to manage five times the volume without adding headcount, Kim said, shifting employees from data entry toward higher-value financial analysis.
He cited additional figures from Ottimate’s customer base. The platform automatically codes 93.3 percent of line items to the correct general ledger account, saving an average of 106 hours per month and nearly $28,000 in labor annually. Reducing the invoice lifecycle from three days to under one day, as most of the company’s grocery customers experience, delivers labor savings worth an average of $53,400 per year.
“Grocery retailers can’t hire their way out of this problem,” Kim said. “They need to automate their way out.”
For operators running on thin margins with lean back-office teams, he said, the payoff is less a convenience than a competitive necessity: “It’s a meaningful operational advantage that lets your people focus on analysis and vendor relationships instead of data entry.”
About Ottimate
Ottimate (formerly Plate IQ) is an AI-powered accounts payable automation platform that helps finance teams shift from reactive accounting to proactive profitability. Its AI works across the entire invoice-to-payment lifecycle — capturing and coding invoices, automating approvals, catching cost discrepancies, flagging fraud risk and paying vendors directly — for businesses in grocery, retail, hospitality, healthcare, accounting, construction and manufacturing. Ottimate integrates with accounting systems including QuickBooks, NetSuite, Acumatica and Sage Intacct. Learn more at ottimate.com.